MORE JOBS, BETTER JOBS: BASELINE STUDY

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1 JRF Programme Paper Cities, growth and poverty MORE JOBS, BETTER JOBS: BASELINE STUDY Nicky Denison, Les Newby and Victoria Gell November 2014 This paper: acts as a baseline to inform the More jobs, better jobs programme and track progress and impact over time; synthesises existing data on trends across key economic, employment and poverty indicators in the Leeds City Region; makes an impartial assessment of current attitudes and understanding on the economy, employment and poverty; policy, plans and commitments in place on these issues; and supporting actions being taken. The Joseph Rowntree Foundation (JRF) commissioned this paper as part of its programme on cities, growth and poverty, which aims to make a practical case for how and why cities should link growth and poverty. ISBN Wordfern Limited 2014

3 Introduction, methodology and baseline summary scorecards The More jobs, better jobs programme was launched in February 2014 by the Joseph Rowntree Foundation (JRF) in partnership with Leeds City Council and the Leeds City Region (LCR) Local Enterprise Partnership (LEP). At the heart of the programme sits a fundamental concern that as a local economy grows not all people or places within it will benefit equally. As the LCR economy begins to recover from recession, it is critical that people and places are not cut off from the prosperity and jobs that a return to growth can bring. As such, the partnership is seeking to: better understand the relationship between poverty and the economy at a city region level; identify what can be done, by who, at local level to create more and better jobs that help lift people and places out of poverty; make a compelling, practical case for change on why and how cities should link growth and poverty; make addressing poverty a more integral part of local growth strategies. The More jobs, better jobs baseline study: scope and methodology The More jobs, better jobs programme is at the start of a four year lifespan. To deliver the above objectives, it is vital that there is an understanding of the scale of the shift needed to move to a position where poverty reduction and growth go hand in hand. The baseline study was designed to provide this starting point, to inform programme activity and track progress and impact over time. It does this by making an impartial, fair and robust critique of: current attitudes and understanding of the economy, employment and poverty; policy, plans and commitments in place on these issues; and the action and resources deployed towards them. The scope of the study therefore is to: synthesise existing data on trends across key economic, employment and poverty indicators; assess how these concepts and connections between them are understood in the city region; identify strategic intent across LCR on this agenda, in particular by review of relevant strategy documents; identify what practical action is already happening to link growth, jobs and poverty across LCR. The study was carried out between March and May 2014 using the methodology set out in Table 1. 3

4 Table 1: More jobs, better jobs baseline methodology Attitudes and understanding: Assessment of understanding and priority given to the economy, employment and poverty, and the nature of the links between them. Change over time noted. Policy, plans and commitments: Identification of policies and plans in place on the economy, employment and poverty, and light touch assessment of them. Change over time noted. Action: Identification of headline actions on economic development and poverty, and extent to which they are connected (reflecting past policy and investment decisions), as well as headline economic budgets for the city region. Indicators and outcomes: Analysis of economy, incomes and poverty data to provide a quantitative basis for measuring change, and allow comparison between different areas. Tool Interviews Interviews + strategy mapping Interviews + analysis Data analysis Specifically, the study: Interviewed 33 individuals weighted in the first instance towards LCR local authorities and the LEP, given their prominent strategic, funding and delivery role on these issues, alongside senior representatives from the wider public (health and further/higher education), private and third sectors in Leeds to allow intensive exploration of linkages across sectors within one local area. This was an intentionally small sample, designed to give an initial view of the attitudes and understanding of key stakeholders and the commitment, policy and action of their organisations. All interviewees were asked whether their organisation s position had changed in the last 12 months, to get a picture of recent trends and to allow for any influence following the public launch of the More jobs, better jobs programme on 7 February Undertook quantitative analysis to provide a headline overview of existing economy, jobs and poverty data to help better understand the relationship and thread that runs between these issues at a local and city region level, and to allow trend based comparison, forecasting to 2020, and give a basket of indicators to baseline and monitor change. Mapped local area strategies and plans focused in the first instance on assessing local economic and health and wellbeing strategies, and the LCR Strategic Economic Plan and European Structural Investment Fund Strategy , alongside an overview of other local plans to identify the extent to which the visions, objectives, actions and indicators of the current strategic framework at a local authority and LCR level incorporate and connect the economy, jobs and poverty. 4

5 A scoring system was used throughout the study. In interview, individuals were asked to self-assess particular matters on a score of 1 10 (where 10 is high). This technique was also used in the assessment of strategies and plans. The 1 10 scores are translated into a red amber/green (RAG) rating based on a percentage distribution as follows: 1 4 (or less than 50%) (or 50% 74%) (or 75% 100%) Baseline summary scorecards This report sets out the findings in full. For reference, a headline summary is presented in the two scorecards shown below. The first gives an overview of attitudes and understanding; plans, policies and commitments in place; and actions being taken around the agendas of the economy, employment and poverty. The second gives an overview of data on trends across key economic, employment and poverty indicators in the Leeds City Region. 5

6 More jobs, better jobs baseline: summary scorecard June 2014 Attitudes and understanding Economic growth Growth fundamental to our future agreed by all, but meaning of growth questioned narrow focus on GVA simplifies more complex picture of economic success where growth s impact on people and places is critical. Caveats placed on the type of growth where the jury is out must be sustainable, equitable, inclusive, responsive a good growth narrative is beginning to emerge. Local authorities and private sector clear on their role in growth; the VCS and wider public sector less so. Poverty Language of poverty is complex and can alienate audiences, especially business, and make organisations question their role and responsibilities in it. There is a tension between personal views and institutional mission. Good growth agenda can help make the case by bringing in issues such as quality jobs, skills, progression and incomes. Agenda on poverty is evolving welfare reform, funding cuts and recession have sharpened focus to a narrative of self-sufficiency, resilience and employability. In-work poverty is rising in profile and becoming part of narrative but not yet fully understood or acted upon; in addition, a national emphasis on child poverty and young people is shaping attitudes. Connection between growth, jobs and poverty Scepticism on the connections that exist and the view on how growth impacts on poverty is more developed than vice versa. Trickle down does not work notwithstanding some conscious or otherwise reliance on it; the type of growth counts, but not all places can pick and choose. At foothills of better connecting the two aided by stronger evidence base More jobs, better jobs already helping to make the case. Mean rating Importance 8.9/10 Importance 8.3/10 Impact of growth on poverty 5.9/10 Impact of growth on poverty 5.5/10 Assessment of overall attitudes and understanding Robust starting point of attitudes to growth and poverty individually with an emerging narrative of good growth but much more to do to make the case for the connection and interdependencies and for a systematic joining up of the two. Amber Overall quadrant mean *= 7.1 6

7 Plans, policies and connections Stakeholder interviews: internal plans/policy Organisations viewed connections between their own plans and policies on growth, jobs and poverty as typically no better than middling. Scores were highest in the VCS and the LEP, and lower in health and higher education organisations. Mean rating Internal connection 5.8/10 Stakeholder interviews: perceptions around the commitment and policy of others on poverty reduction Local authorities: committed and central, but with limitations in turning vision into action. VCS: passionate and active, but bitty and small scale. Overall connection 5.7/10 Businesses: split between large ones that do CSR, local ones that want to give back and others who feel it s not their job. LEP: focus is growth not poverty, but active on jobs/skills. Colleges and housing associations: growing in importance. Local authority strategy mapping: assessing economic strategy, health and wellbeing strategy and other key plans Economic strategies: content and link on jobs and poverty are patchy. Some good practice, but not the norm, with 3 of 7 strategies making very poor links to reducing inequalities and poverty in particular. Health and well-being strategies: usually weak on economic links, medium on jobs and good on inequalities.wide variation. Corporate, community and anti-poverty strategies score more highly, but the latter two can lack prominence. Overall strategic frameworks are semi-coherent links are made, but not comprehensively and gaps exist. Plenty of scope to improve. Assessment of overall commitment and policy Connections between strategies and on growth, poverty and jobs are made, but they tend to be haphazard and vary greatly. There is potential for much better and more consistent linkages. Economic strategy 5.8/10 HWB strategy 5.8/10 Connection across all 6.1/10 Amber Overall quadrant mean = 5.8 7

8 Action Organisational action Organisations are taking a range of actions they feel are significant but insufficient in scale. Self-assessment ratings are highest in the VCS, lower in public sector health and higher education institutions. The spread of action is very wide and spans poverty, jobs, skills and growth. Very often projects cover more than one of these bases. There are concentrations of activity around apprenticeships, work experience and pre-employment, training and skills, the living wage, business growth/support and financial inclusion. Projects often involve multiple partners, for instance councils, the LCR LEP, colleges, businesses and VCS organisations. But better connections can be made. What more could or should be done? Overall level of local action scores are the lowest in the survey. All sectors think that their performance on internal action is better than the overall level of action in the local area. Stakeholders think that more can be done, usually much more. Lots of specific suggestions for new/more action, including on childcare, mentoring, more enterprise and apprenticeships in deprived areas and support on job applications. But also calls for a more strategic, collaborative and ambitious approach with prioritised actions informed by sophisticated intelligence and delivered in partnership. Mean rating Internal action Scale and connection 6.2/10 Is enough being done locally overall? 5.3/10 Assessment of overall action A consensus that despite a lot of action, it is not making the required difference and that both more, and more effective, action is needed. Action spans growth, jobs and poverty, and while connections are improving, they are not yet sufficient. A more strategic, collaborative and targeted approach is needed. Amber Overall quadrant mean = 5.7 Note: overview quadrant scores are means for all the questions under the relevant heading. Variation in individual question scores is averaged out in this mean. Please see detail of the report for individual scores. 8

9 Leeds city region data scorecard In 2013, it was estimated that the Leeds City Region economy was worth 53.1 billion (at 2008 prices) and accounted for around 4% of the UK economy. Average annual growth in GVA tracks slightly below the UK average, growing an estimated 0.8% between 2012 and 2013, compared with the UK average of 1%. Growth 6 Annual % growth in GVA LCR UK LCR UK Productivity per worker rates at 43,600 in 2013 are below the UK average of 51,100, and remained static between 2010 and Productivity per worker ('000s) % change Trend LCR No change UK Decline In 2013, there were around 1,380,300 people across the Leeds City Region in employment, out of a total of 1,971,500 working-aged people (aged 16 64), representing 4.8% of the UK workforce. Jobs Employment rate (%) % change Trend LCR Improvement England Improvement UK N/A Improvement Both the and the employment rates have shown improvement between 2010 and 2013, but rates remain lower than the England and UK averages. Employment rate (%) % change Trend LCR Improvement England Improvement UK Improvement 9

10 In 2010, 26.9% of Leeds City Region s SOAs were in the 20% most deprived in Number and percentage of SOAs in 20% most deprived Trend # of SOAs # % # % # % LCR total 1, Decline England and although there was some improvement between 2004 and 2007, there has since been a small decline to In-work poverty Poverty 20 25% of workers in the Leeds City Region are earning below the living wage of 7.65 an hour between 274,000 and 343,400 people (approximately 10% of full-time workers, and at least 40% of part-time workers). The difference between the richest and the poorest is not as pronounced as nationally, with a 8.18 difference per hour between the 25 th and 75 th percentiles across West Yorkshire, 8.77 across North Yorkshire and 7.07 in Barnsley, compared with 9.77 across England. In March 2014, there were 69,368 people claiming Unemployment Benefit in the Leeds City Region (3.6%) of which 32,775 (1.7%) had been claiming for six months or more. Total claimants in the Leeds City Region represents 7.2% of all claimants in England and 5.8% of all claimants in the UK. In 2013, Barnsley Out-of-work poverty ILO unemployment stood at 8.7% across the Leeds City Region, compared with 7.6% across England and 7.7% across the UK Bradford Gross hourly pay ( ), Calderdale Craven Claimant count rate (as of March each year) % change Trend LCR Improvement England Improvement UK Improvement Harrogate Kirklees 2.5 Claimant count rate: 6 months Leeds Selby 10.1 Wakefield York LCR England UK UK Employment Support Allowance/Incapacity Benefit/Severe Disablement Allowance benefit claimants account for 6.2% of the working-age population in the Leeds City Region (6% on average across England). 10

11 Growth, jobs and poverty: an overview of the Leeds City Region data context A key element of the More jobs, better jobs baseline is the assessment of the current picture of growth, jobs and poverty in the city region. An overview is provided here, with more detail in Appendix 2: More jobs, better jobs baseline: Local data analysis, and Appendix 3: More jobs, better jobs: Local data score cards, both available as separate documents. Growth As an area historically focused on production and manufacturing, the Leeds City Region has experienced significant economic structural changes over the past 30 years, and has had to re-establish itself with a greater focus on service-related, technological and innovative new industries. Overall, it was hit harder and for longer by the recent recession that the rest of the UK, and its economy is currently worth 53.1 billion (2008 prices). This is less than it was worth in Although growth of 13.9 per cent is forecast to 2020, it will still probably lag behind the UK average (a forecast 15.1 per cent), thereby increasing the productivity gap further (see Figure 1). Fully closing this productivity gap in 2013 could add an additional 9.1 billion to the city region s economy. Leeds accounts for over a third of the city region economy, and growth to 2020 will be driven predominantly by the finance; wholesale; administrative and supportive services; professional services; real estate; retail; health, and land transport, storage and post sectors. 11

12 Figure 1: Average annual percentage growth rates in gross value added (GVA) Leeds City Region United Kingdom Leeds -10 Source: Experian Business Strategies, Regional Econometric Model, September Based on 2008 CVM prices. Jobs An extra 81,200 jobs are forecast across the city region between 2013 and 2020, a growth rate of 5.5 per cent, with the greatest increases expected in professional services, health, administrative, financial, transport, storage and warehousing, retailing and construction related sectors. With almost a third of all employment based in Leeds, the city is expected to attract around 34,300 of these new jobs over the next seven years. Nearly half (44.3 per cent) of these new jobs created will most likely be in occupations that require qualifications at Level 4 or above. Only an additional 13,000 new jobs requiring either no qualifications or those below a Level 2 are expected to be added. At the same time, declines in job numbers will generally be felt in occupations where lower levels of skills are required. This hollowing out of the workforce in lower-middle skill level occupations most affects administrative and secretarial occupations, the skilled trades, and sales and customer services and elementary occupations, while professional, associate professional and caring, leisure and other services occupations showed the greatest levels of growth between 2004 and Forecast trends between 2013 and 2020 show this declining pattern continuing to affect the administrative and secretarial occupations, although the predominance of the manufacturing industry across the Leeds City Region may mean 12

13 that skilled trades occupations show some growth, in comparison with national downwards trends (see Figure 2). Figure 2: Percentage change in employment by broad occupational group and across the Leeds City Region : managers, directors and senior officials 2: professional occupations 3: associate prof & tech occupations 4: administrative and secretarial occupations 5: skilled trades occupations Source: Office for National Statistics, Labour Force Survey, , and Experian Business Strategies, Regional Econometric Model, September 2013 for forecasts. Replacement demand, however, will account for 617,000 jobs between 2010 and 2020 of which 138,000 will be in administrative, elementary administration and service and sales occupations (see Figure 3). Therefore the importance of replacement demand for workers occupying these lower-middle skill level occupations cannot be understated. 6: caring, leisure and other service occupations % change % change : sales and customer service occupations 8: process, plant and machine operatives 9: elementary occupations 13

14 Figure 3: Replacement demand ( 000s jobs) by broad occupation, across the Leeds City Region 1. Managers, directors, senior officials Professional occs Associate prof & tech occs Admin & secretarial occs Skilled trades occs 6. Caring, leisure and other service occs Net Requirement Expansion Demand 7. Sales & customer service occs Process, plant & machine operatives Elementary occs Source: University of Warwick, Institute for Employment Research, The challenge remains of better connecting people to these jobs. Working-age employment rates across the city region continue to lag behind the UK average (70.3 per cent, compared with 71.1 per cent, see Figure 4), and while there are many reasons for economic inactivity, there are currently 1.5 million working-age people across the city region that are economically inactive, of which just over a quarter want a job. Figure 4: Employment rates of working-age people (16-64) across the Leeds City Region, with Leeds and UK comparisons Leeds City Region Leeds United Kingdom Source: Office for National Statistics, Annual Population Survey, employment rates of working age people (aged 16 64), annualised for October September each year. 14

15 It is not just an issue of reconnecting those on the edge of the labour market, however; ensuring a child s life chances are not jeopardised by poverty and low income is a significant challenge to the school system, and while excellent progress has been made recently in reducing the number of year-olds not in education, employment or training (NEET) down from around 7,000 in December 2011 to 5,500 by December 2013, the associations between poverty and low educational achievement and subsequently reduced employment chances are well documented. Labour market supply and productivity are also affected by health, both in terms of (healthy) life expectancy and determinants of health. There is considerable variation across the city region, with areas with higher incomes and employment rates (in York and North Yorkshire) having health indicators that outperform other areas of the city region and England average. Poverty A high proportion of the Leeds City Region experiences severe deprivation, with 26.9 per cent of its Super Output Areas (SOAs) in the 20 per cent most deprived in the country (see Figure 5). Significant localised pockets of deprivation are apparent in Bradford, while Barnsley, Wakefield and Bradford also exhibit much higher than average levels of employment deprivation. Overall, if there was total equity across the country, you would expect 10 per cent of the SOAs in each area to be in the 10 per cent most deprived, 20 per cent to be in the 20 per cent most deprived and so on. 15

16 Figure 5: Proportion of Super Output Areas in the 20 per cent most deprived in the country by local authority district Source: Department of Communities and Local Government, Index of Multiple Deprivation, Red shading indicates higher levels of deprivation, blue indicates lower levels. In-work poverty Proportion of Super Output Areas in the 20 per cent most deprived in England Overall deprivation Income deprivation Employment deprivation Education, skills and training deprivation Bradford Leeds Calderdale Kirklees Wakefield York Craven Harrogate Selby Barnsley LCR total Between 274, ,400 workers (20-25 per cent) across the Leeds City Region are currently earning below the living wage, and the city region has a higher proportion of workers in the occupations paying below average, especially in Barnsley, Bradford and Wakefield, where higher than average numbers of workers are in sales and customer service, elementary and process, plant and machine operative occupations. These lower-paid occupations (see Figure 6) are more prevalent across the residents of certain localities of the Leeds City Region. For example, Barnsley has 79 per cent more process, plant and machine operatives, than the UK average. Sales occupations form a larger part of the workforce across Barnsley and Bradford in particular, but also in Leeds, Wakefield and York, while elementary occupations which form the lowest paid occupations, are more prevalent across residents of Craven, Wakefield and York. At the other end of the scale, Harrogate has a much higher than average proportion of managers, directors and senior officials. 16

17 Figure 6: Median gross hourly pay by occupation across the UK, Current minimum wage Living wage Sales occs Elementary admin & service Elementary trades & related Textiles, printing & other skilled Leisure, travel & related personal Caring personal service Skilled agri & related trades Customer service Secretarial & related Process, plant & machine ops Transport, machine drivers & ops Administrative occs Skilled construction & building Overall average Health, social care assoc profs Skilled metal, electrical, Culture, media, sports occs Science, engineering, technology Other managers/proprietors Bus & public service assoc profs Protective service occs Health profs Bus, media, public service profs Science, research, eng, Corporate managers/directors Teaching & educational profs Source: Office for National Statistics, Annual Survey of Hours and Earnings, 2010, 2- digit occupational gross hourly pay across the UK. Out-of-work poverty Recovery in jobs growth since the recession has taken longer than average to bounce back, and ILO unemployment rates continue to track above the UK average (8.7 per cent, compared with 7.7 per cent, see Figure 7). The impact of long-term unemployment, however, can be extremely detrimental, not only to a person s/household s income, but also to their mental health and overall well-being; 22,600 people have been claiming unemployment benefit for over a year across the city region. 17

18 Figure 7: Claimant count and ILO unemployment rate and annual jobs growth across the Leeds City Region, compared with the UK average: LCR claimant count UK claimant count 10 LCR Jobs growth UK Jobs growth Average annual percentage growth rates LCR ILO unemployment UK ILO unemployment Sources: Office for National Statistics, residence-based claimant counts with rates and proportions, based on claimant count rates as of February each year; Annual Population Survey for ILO unemployment (Jan Dec each year) and Experian Business Strategies, Regional Econometric Model, September 2013, total employment for annual jobs growth percentage rates. The remnant effects of an industrial heritage in mining also linger, with both Barnsley and Wakefield retaining a higher proportion of Incapacity Benefit/Severe Disablement Allowance/Employment Support Allowance claimants, at 9.4 per cent and 8.3 per cent of working-age people respectively (LCR and England averages are 6.2 per cent and 6 per cent). The impact of household worklessness affects around 16,700 dependent children across the city region, with a fifth or more children across West Yorkshire and Barnsley classed as in poverty in 2010/11. That said, almost 40 per cent of working families in Bradford are classed as low-income, with Kirklees, Leeds, Wakefield, Calderdale and Barnsley all experiencing higher proportions of working families receiving low-income benefits. The costs of poverty The costs of poverty are difficult to quantify, but broad analysis suggests that out-ofwork benefit costs could be costing the Leeds City Region in the order of 2.06 billion 18

19 (for 2013); troubled families cost around 600 million and child poverty around 700 million in Leeds and Bradford alone. 19

20 Attitudes and understanding Summary Despite some uncertainty on technical definitions, there is a strong appreciation of the concepts and their importance, reflected in high mean scores of 8.7 and 8.3/10 (see Tables 2 and 3). However, when asked about the ways in which they are connected and their impact on each other, opinions were less well formed reflected in much lower mean scores of 5.9 and 5.5/10. There is substantial scope therefore to further inform attitudes and understanding and as such the overall grading applied is amber. Key messages are: Interviewees rate growth and poverty as (virtually) equally important at 8.9 and 8.3/10 respectively. Growth is far wider than gross value added (GVA). It is used as shorthand for economic success in the round. Without prompting, most interviewees referred to the quality of growth as vital referring to sustainable, resilient and inclusive. As one local authority noted the jury is out on growth. There is a view that a good growth narrative is beginning to emerge. The language of poverty is complex and can alienate audiences, making organisations question their role and responsibilities on it. The LEP sees that it isn t our role, while the private sector refers to not enough social conscience. This shows a tension between personal views and institutional mission. By bringing in issues of quality jobs, skills, progression and incomes, the good growth agenda can address this language barrier and help make the business case. The agenda on poverty is evolving welfare reform, funding cuts and the recession are sharpening focus and moving away from benefit maximisation towards a narrative of self-sufficiency, resilience and employability. In-work poverty is rising in profile but is not yet fully understood, built into strategy or acted upon. A national emphasis on child poverty and young people is also shaping attitudes, shifting the focus away from older adults where poverty and unemployment can be more entrenched. Despite good understanding of growth and poverty individually, everyone is much more sceptical on how far they are currently connected. There is emerging highlevel political ownership, but some way to go before it is fully embedded in organisational ethos and practice. 20

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